Syria presses ahead with liberalization

  • By Gareth Smyth
  • 06 Oct 2009
Email a colleague
Request a PDF

The IMF and the Syrian Central Bank yesterday reaffirmed the importance of the country’s economic liberalization, despite the limited effect of the global crisis due to Syria’s relative isolation.

Khaled Sakr, the IMF’s mission chief for Syria, told Emerging Markets from Washington: “The low level of integration of the Syrian financial sector [...] has contributed to a limited impact of the global crisis.

“However, economic liberalization brings with it many opportunities. Syria has already been gradually moving to a market-based economy and this is likely to continue.”

Adib Mayaleh, the governor of the Syrian Central Bank, said Syria would introduce VAT in 2010, after a year’s delay for “technical reasons”. The move has been identified by the IMF as the key change in taxation reform.

“In the world of banking, you cannot have isolation,” Mayaleh told Emerging Markets in Istanbul. “At the same time you should have strict regulation – and this is why we had few problems in Syria.”

Mayaleh put economic growth at 5% in 2009 and 6% in 2010, higher than the IMF projections of 3% and 4.2%.

Syria’s huge state sector has been partially reformed under the presidency of Bashar al-Assad since 2000. But 2 million from a population of 20 million are employed in the public sector.

An IMF staff report published early this year highlighted the challenge presented by diminishing revenue from oil as reserves dwindle.

Sakr praised the Syrian authorities’ success in maintaining a fiscal deficit at around 5% of GDP – despite lower oil revenues, as production has fallen to 380,000 barrels a day from 590,000 barrels a day in 1996.

“The authorities’ fiscal consolidation efforts have helped reduce the non-oil deficit and stabilize the overall deficit despite the downward trend in oil revenue,” he said.

“The fiscal outlook is expected to remain broadly stable over the medium term, and the public debt to remain at a sustainable level in view of the planned reforms.”

The decline in net oil balance, together with a poor performance in the agriculture sector due to severe drought, has produced a trade deficit that the IMF puts at $3 billion in 2008.

Mayaleh said that the Central Bank had developed a “clear function and some independence” since he became governor in 2005. He said overall banking deposits – including both state banks, and the 15 private banks opened since 2004 – had increased since 2005 by two-and-a-half times in Syrian pounds and by seven times in foreign currencies.

The IMF, which will send a team to Damascus next month for Article IV consultations, has identified the reduction of state subsidies as a priority.

“Subsidies ... are often associated with price distortions and can lead to inefficiencies in production and consumption patterns,” said Sakr. “Furthermore, they are often not well-targeted, which results in high fiscal costs and sometimes insufficient support for the vulnerable groups.”

Syria last year began a programme to phase out fuel subsidies by increasing diesel and petrol prices, easing the impact on poorer households by issuing them with coupons.

Syria’s commitment to change, Mayaleh said, meant it was ready for such decisions that were “not easy to take”. “There has been big resistance to change,” he said. “We must change the mentality, and this cannot happen suddenly. We are working on this very hard.”

  • By Gareth Smyth
  • 06 Oct 2009

All International Bonds

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 315,565.94 1183 8.89%
2 JPMorgan 288,650.70 1316 8.13%
3 Bank of America Merrill Lynch 284,218.69 988 8.01%
4 Goldman Sachs 215,758.12 710 6.08%
5 Barclays 207,555.74 805 5.85%

Bookrunners of All Syndicated Loans EMEA

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 HSBC 32,400.29 147 6.76%
2 Deutsche Bank 32,042.83 103 6.69%
3 Bank of America Merrill Lynch 28,820.43 84 6.02%
4 BNP Paribas 25,608.74 143 5.35%
5 Credit Agricole CIB 22,617.86 130 4.72%

Bookrunners of all EMEA ECM Issuance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 JPMorgan 18,067.92 70 9.12%
2 Morgan Stanley 15,215.44 76 7.68%
3 UBS 14,195.29 55 7.17%
4 Citi 14,014.57 86 7.07%
5 Goldman Sachs 12,113.98 67 6.11%